Americans have a pretty dismal view of the economy these days, and who could blame them? Skepticism about the ability of regulators and lawmakers to get a handle on deficits and spending, constant worry over Europe’s sovereign debt crisis and a turbulent stock market are doing little to inspire confidence that things are heading in the right direction.

Fannie Mae’s August survey on the housing market confirms as much, finding that more than three quarters of Americans (78%) say the economy is on the wrong track and 22% expect their own financial footing to worsen over the next year.

Fannie Mae chief economist Doug Duncan explains the pessimism thusly:

I believe the public was looking at the U.S. debt, deficit, and the ensuing political struggle with one eye, and looking at Europe and their sovereign debt issues with the other eye, and saying: 'This is not what we want.'

Jobs are undoubtedly at the heart of the issue – with unemployment running at 9.1% and the economy adding workers at a snail’s pace – and President Obama’s pitch for a $450 billion package of tax cuts and hiring incentives has been falling flat with investors. The other side of the coin is housing, and the Fannie Mae survey painted a bleak picture there as well.

For three straight months, the consumers surveyed by the government-sponsored mortgage firm have expected home prices to decline over the next 12 months, most recently by a margin of 0.5%, compared to 0.3% in July. Nearly three quarters of those surveyed (69%) say it is a good time to buy a home. That seems incongruous, but with affordability at record levels and mortgage rates at enticing lows the logic holds. Consumers are not putting their money where their mouths are though; sales of both new and existing homes continue to bounce along their lows and the a massive unsold inventory continues to depress prices in many U.S. markets. (See "U.S. Home Prices Could Be Stuck Until 2014.")

Home rental prices will move higher over the next year, 46% of Americans believe, and the expectation is for a 3.5% increase, while 34% say their next home will be a rental. That is consistent with the view from Raymond James analyst Buck Horne, who covers the real estate investment trust space and expects owners of residential buildings to push rent increases as demand for apartments rises in many cities.

So with housing and jobs – two crucial matters for the U.S. economy – in decidedly rough shape, what is an investor to do? Scott O’Neil, president of charting service Market Smith and a Forbes contributor, saw a market top back in May and compares the current landscape to “a no-man’s land with a sandstorm blowing in your face.”

Staying on the sidelines is a tough pill to swallow for many investors who are itching to recoup a nest egg devastated by the market plunge of 2008, but you can’t force the market. Throughout August, volume was much higher on down days than up days, O'Neil warns, a clear signal that big institutional money was getting out of stocks. In the face of that trend, and volatility that can turn weeks of gains into a loss in a matter of days, or even minutes, he sees moving into cash as a way to make sure you don’t go backwards. “Why get in the ring with Mike Tyson?” he asks in an a conversation at Forbes’ offices Friday. “You get knocked down with a right and then as soon as you get back on your feet you get hit with a left.”

Before painting O’Neil with the perma-bear brush, consider this: he fully expects another bull market is on its way. Though he currently sees a short position as “the path of least resistance,” and has for months, he thinks the next uptrend is only a few years away. There is a lot of negativity in the air, O’Neil explains, but it ultimately comes down to one question: do you still believe in America?

“I do,” he says, arguing that while he anticipates a few more years of a difficult market, he also sees similarities to the 1982 period, when the economy and the market turned a corner, though he acknowledges the notable difference in interest rates, which were then sky-high after the Federal Reserve embarked on a tightening regime under Paul Volcker to break the back of inflation.

MarketSmith O’Neil, whose stock investing is growth-focused, has a list of seven stocks it tracks for signals on the market’s view. Those “Super Seven” – Apple, Baidu, Netflix, Priceline, Lululemon, Green Mountain Coffee Rosters and Chipotle Mexican Grill – can provide an early indicator of a bear phase for markets. That has kept O’Neil largely on the sidelines, thinking about preserving capital and protecting his investments or, as he puts it “playing defense before offense.”